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		Understanding P/E ratios We've all heard about P/E ratios, but if it were worth $250,000 for you to explain to Regis Philbin what exactly a P/E was, could you? As you answered price-to-earnings ratio, would it be your final answer? If you said yes, you'd be a winner. But why are they so important in selecting stocks? The current P/E ratio for any stock is its current share price divided by the last four quarters of the company's accumulated earnings per share. So if the stock's price is $100 and the company earned $5 in the prior four quarters, then its P/E ratio is 20. The P/E is a simple yet powerful concept that helps gauge how investors feel about a stock and profits it may generate. Email this story to a friend		Search BlueSuitMom.com Email this page to a friend    D o l l a r s   &   S e n s e • Freebies and Super Savers • Small Business Finances • Small Business Advice • Salary Survey • The Dollar Stretcher • Sign Up For Our Newsletter • Business/Investing Books    W e e k l y    P o l l  Are you the family breadwinner? Yes No My partner and I make the same salary View results
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